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Top 5 STI stocks over the last 12 months

My Gateway (92 x 92)  The Straits Times Index (SGX:^STI) is a diversified stock market Index with its components coming from a wide range of sectors. Almost every other stock which makes up the STI represents a different sector. In total, the 30 STI components represent 14 different sectors.

The five best-performing STI constituents over the past 12 months represent five different sectors i.e. Beverages, Aerospace & Defense, Industrial Transportation, Mobile Telecommunications and Real Estate Investment & Services. The five are Thai Beverage (SGX: Y92), Singapore Tech Engineering (SGX: S63), SIA Engineering (SGX: S59), Starhub (SGX:CC3) and Global Logistic Properties (SGX: MC0) respectively.

The 12-month total returns (which include dividend distributions) of these STI constituents are detailed in the table below.

Five STI Constituents with the highest returns over past 12 months SGX code Mkt Cap S$bn ICB Sector Name 12M Price Chg Pct 12M DVD

Yld  Gross

12M Total Return
THAI BEVERAGE Y92

11.8

Beverages

42.4

3.7

47.0

SINGAP TECH ENG S63

12.2

Aerospace & Defense

17.4

4.3

21.9

SIA ENGINEERING S59

5.4

Industrial Transportation

15.8

4.5

21.3

STARHUB LTD CC3

7.2

Mobile Telecommunications

15.5

4.8

21.1

GLOBAL LOGISTIC PROP MC0

12.9

Real Estate Investment & Services

14.9

1.5

16.5

Source: Bloomberg, SGX My Gateway, ICB is Industry Classification Benchmark.

The five STI stocks that have been the most laggard over the preceding 12 months are Noble Group, Golden Agri Resources, Jardine Cycle & Carriage, Olam International and Sembcorp Marine – 12 month total returns of these five constituents have ranged from -32.5% for Noble Group to -11.4% for Sembcorp Marine.

Of the five sectors represented detailed in the table above, three sectors have multiple representation in the STI. The five STI constituents that represent the Real Estate Investment & Services Sector averaged a 6.5% total return over the last 12 months. The Industrial Transportation Sector and Mobile Telecommunications Sector each have two constituents. Over the last 12 months, the two STI constituents that represent Industrial Transportation averaged a 15.3% total return while the two STI constituents that represent Mobile Telecommunications averaged 16.7%.

Importance of Sectors

As noted in the table above, the best performing STI constituent of the past 12 months came from the beverage sector and three STI constituents that generated a 21-22% total return represented three different sectors.

One of the most popularly taught methods to reduce risk related to stock performance is to build a diverse stock portfolio – and one of the most elementary ways to build a diversified stock portfolio – is to select stocks that belong to different business sectors.

Sector diversification can assist investors who seek long-term capital gains. In contrast, focusing on a single stock or sector in anticipation that it will outperform all other stocks or sectors is typically reserved for active traders or speculators.

 

One year ago, when the top five STI stocks over preceding 12 months were discussed in the SGX My Gateway Newsletter in mid-August 2012 (click here), the five best performing constituents also represented five different sectors.

The 14 different sectors currently represented by STI constituents are Aerospace & Defense, Banks, Beverages, Financial Services, Food Producers, General Industrials, General Retailers, Industrial Transportation, Media, Mobile Telecommunications, Oil Equipment, Services & Distribution, Real Estate Investment & Services, Real Estate Investment Trusts and Travel & Leisure.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.